Anna: After his first technology company, iGoDigital was acquired by ExactTarget, now Salesforce, Dan Hanrahan, Founder and President of Sigstr …
Christian: That's S-I-G-S-T-R.
Anna: ... needed a breather. He needed time and space to think, reflect, and reconnect, and for him that was in the form of a log cabin near Indiana University in Bloomington, Indiana.
Christian: Ah, yes. Log cabins. Nature's accelerator.
Anna: Yes. Obviously. So Dan, building a log cabin…that's where his entrepreneurial wheels started turning. Again.
Dan Hanrahan: I knew I wanted to get back to startups. I all of a sudden it was a part of a very large company. I was so grateful for the opportunity, but I didn't have any space to sort of think about what was next.
Christian: The idea to launch Sigstr didn't happen overnight. It was all about timing, and for Dan, now was the time
Dan Hanrahan: We had talked about it at I Go Digital. We would email our entire company, and we'd ask everybody to copy and paste a banner, for lack of a better term, to the bottom of your email signature. We'd go to the trade show. People would show up, and we'd say, "How did you find us? How'd you know we were here?" They'd say, "We saw it in so and so's email signature." We looked for products to try to solve that and we couldn't find anything.
Christian: All right. Now let's fast forward a bit to today, but first, Anna, what is Sigstr exactly?
Anna: Sigstr is an email marketing technology company which leverages your email signature as a marketing channel. They're doing some pretty innovative stuff with their integrations, which we dive into, and they're launching a new product, Relationship Intelligence. Finally, we'll end the conversation with how to evolve, not as a person, as a product company, from its first user to it's millionth user.
Christian: I think Dan might actually teach us how to evolve as a person as well. I don't want to oversell it, but-
Anna: We could probably all learn a little bit about evolving from Dan.
Christian: ... Now that we're all caught up, let's get to the point in the conversation where I ask Dan how integration's played a part in their ability to raise their Series A and scale the product.
Dan Hanrahan: I think whether it's integrations or whether it's building other products on your platform, anywhere where it's a one plus one equals three. Sigstr on its own integrated in Gmail and Outlook is okay. Sigstr plus your customer segments, and targeted content based on those that might live in CRM or marketing automation, now we're helping the marketer get more out of their investment in those tools, and they're getting more bang for their buck in targeted content every time an employee hits send. So, it's the sum of the parts is greater than the whole. Right? Whether you're doing an integration or whether you're doing a building a new product within your company, I think those two things tie closely together.
Christian: So, aside from Gmail and Outlook, what was the first integration you set out to build for Sigstr?
Dan Hanrahan: Well, the first one, I think, where we got a lot of traction was HubSpot. What we've done then with HubSpot, we've replicated that model with some of the other marketing automation tools, but the reason we chose them was because they cared. I think that's a really important part of partnerships is they were actually leaning in, right? They're a publicly-traded company, but cared about, at the time, what was a 20 person company when we started that journey.
Christian: First of all, how did you decide on HubSpot? I understand they're great. They cared. Before that, are you sitting in a room deciding? Are you prioritizing possibilities for integrations? What does that look like?
Dan Hanrahan: It's a balance. Like, what are the gaps in the product? Because we could've gone and we could've said, "Hey, bring all your customer data to Sigstr and segment it all here." You're like, "Why would they want to do that? They already do that somewhere else."
Christian: Was there ever a moment, though, where you were sitting in that room advocating for that?
Dan Hanrahan: The natural inclination is to want to build everything, and own everything. I'll tell you an interesting story. I said to one of our early investors, I said, "Hey, I think I'm going to give Sigstr to HubSpot for free so that all of their customers will see what the product is, and when we go to the show will make a big splash." He said to me, "So, you're thinking about giving your tool away for free to potentially your biggest competitor/" And sure, that could happen, but it wasn't really on HubSpot's radar, or other partners' radars. So I said, "Yeah. We're going to do it. I think we should do it." He said, "Well, one way or another, I think you have a chance to end up in a Harvard Business Review story."
Christian: Yeah. For better or for worse.
Dan Hanrahan: For better or for worse. It was like, you know, you just have to take those risks and try to find the right partners who you trust. Again, I think going back to your earlier question, it was what are the gaps in our product? What adds short-term value in terms of our ability to grow our business? Who could be more strategic partners long-term, but those first two buckets are always, I think, driving our decisions, and the last one is sort of out there as a consideration.
Anna: How do you decide if it's something to build into the product or something to integrate with?
Dan Hanrahan: Yeah. As we've been in those meetings, I'm not sure we've defined this, but is it really like core? Is it essential tech that we need to own? Like, if we partner on something and it goes away, can we still operate with confidence?
Christian: But evolving from there, at some point you made a decision to start working on what ... On the site now, it's called Relationship Intelligence. Take us back to where Relationship Intelligence started.
Dan Hanrahan: It came from a lot of questions from customers. Not that they said, hey, go build relationship intelligence, but customers would ask for things like, "Can you tell me who's opening my email? Can you tell me which companies we're sending the most email to?" We started to unpack those questions, right? Can you tell me he's clicking on my stuff, or whatever it was. When you started to unpack those questions, it really came down to we, being marketers, would like to understand who our sales team is engaging so that we can prioritize the right activities to help. So, we kind of zoomed out and we had some conversations. A couple iterations. Not all of them were great, and we said, "I think what people really want to understand is they want to build a map of the collective network of the company, based on who we email and who we have meetings with." If we had flipped the order and we'd started Relationship Intelligence first, and then started to do [inaudible 00:06:13], we would have failed miserably.
Anna: Why do you say that?
Dan Hanrahan: I'll tell you a funny story, and this, I totally screwed this up. Our original website said, "No IT involvement required," because marketers and salespeople did not want to go ask IT to help stand up something, right? Because IT is busy and they're just going to say no or whatever. Now, our sales process, you can't close a deal until we've sent your email administration team a 10 question survey, and we've had a quick call to let them ask all the questions around security and privacy that are that are important to them. So, all that work that we had done, and sort of the disciplines and the teams that we had built on the email signature marketing side, if we didn't have all of that understanding, people wouldn't let us do what we do with Relationship Intelligence.
Anna: We interrupt this conversation to give you more context. While our conversation with Dan was jam-packed full of goodies, which is a word I always use, we just don't have enough time on this episode to give you all the back and forth. One thing we found super interesting about Dan is that while he's the Founder, he's not the CEO.
Dan Hanrahan: It's funny. At Sigstr, our team will be sitting there in a meeting with us, especially in the early days, and be like, "What is going on?" Because Brian thinks in sort of two year increments. He's often talking about things that are maybe two years out, but he talks about them so that we can make the right decisions today to go out. I'm talking about more like three to six months out. Like more of a startup mindset, and so a lot of times I would find myself getting ready to say something. I was like, "Wait Brian. Give me a timeline of what you're talking about here." He's like, "I'm two years"
Dan Hanrahan: Like, "That's great. We can do anything in two years." Whereas in the early days, a lot of times I was like, "There's no way we can go do that, Brian. Here's what we got to go do today to live to fight another day, and make sure we have the opportunities ahead of us." And he's like, "I'm talking like two years from now" So we both have learned. He is a little bit more long-term thinking and I am a little bit more, "Okay, but we got to keep the lights on and take care of our customers."
Dan Hanrahan: If I had to characterize my job versus Brian's job, my job is to take new levers for the business. Six months ago it was partnerships, integrations, agencies, and just trying to push as many of those forward as I could. And then Relationship Intelligence. We had been running a beta, which we started about a year ago, and we launched the product in August. Once we started getting closer to launch, it became pretty clear that we needed somebody just waking up every day thinking about Relationship Intelligence, and how to make sure that launch in that first quarter was really successful. So, that was my job. Now as I get to this, and it's just always changing, which I love.
Christian: Are there any things in the past, in the past couple of years that you start to become concerned about as you put distance between yourself and when something started, or is everything just running smoothly? No issues?
Dan Hanrahan: No, there's always issues, but it's just trusting the people that are there. When I really failed was probably when I tried to stay involved in all of it, and not trust people that we've hired to take care of things, and know that at the center is sort of this culture value system that we're all aligned on, and knowing they'll be the right thing, and they can always raise their hand for help at any point.
Christian: What was the point at which you kind of woke up and said, "I've got to scale myself?"
Dan Hanrahan: Everyday. At the end of the day I look at my to do list. What did I get done? What makes it to the next page? What I found was there were these certain things, these projects, these things that I knew were so valuable for the business that I really was passionate about, but I couldn't get to them because all I was doing was reacting to the needs of the team, which that's what's most important is the team. And so, when all my days were a little bit more reactionary and I couldn't get to the proactive work that could fuel the business, that sort of sucks my soul a little bit. Together with our investors and our team, I think we made a tough decision, but man, it feels great to be on the other side of it.
Christian: The tough decision being, to, you know?
Dan Hanrahan: Yeah. Like, "What do we do? How the heck do I? I love this place. I love the team that's here. How do I stay a part of it? How do I add value?" And then, "Who the heck can we trust to giving the keys to the business to?
Christian: Anna and I were talking a little bit too about scaling your actual product teams. As I assume at some point, Bryan Wade, your CEO, wouldn't be able to oversee the plethora of new features. So, how do you scale a product team to sort of take those on?
Dan Hanrahan: If I were to fast forward six months, I imagine we'll have product management leader, and email signature marketing in Relationship Intelligence. I will say that as we thought about this product, the other part, we got great advice from Brad Coffey at HubSpot, who was there in the early days and helped them become a multi-product company. As we were going down that journey, we were like, "What do you wish you would've known going into that?" He said, "Any product, sort of the litmus test for us is three things. Does have a common buyer? Is it a common brand? Does this fit into the Sigstr brand, and is it on the same tech stack?"
Dan Hanrahan: Right? "Is it a platform?" Or, are we really just a collection of disparate products? Right? So for us, you log into the admin, and across the left side you see email signature marketing things, and you see relationship intelligence things. Underlying both of those are employees that are sending email, and lists of people that you're sending emails to. That sort of architecture and that structure of a common platform, I think that will continue to grow in terms of the options with Relationship Intelligence and email signature marketing.
Christian: Recently you've talked about hoping to get your, I think, millionth user by 2020?
Dan Hanrahan: Yeah. Yeah.
Christian: What, in your mind, is the difference between trying to get the millionth user versus the first user? When you look back on that, what are the key differences there?
Dan Hanrahan: I think it is such a leap of faith for the first user. All the time I see somebody that, and I know by heart are our first 20 customers.
Dan Hanrahan: Anytime that I see one of those people that was the buyer at one of those first customers, I'm like, "Thank you. Anytime you need anything, I hope you will call, and I'll buy whatever you need." You know? Like, "If you're selling something, I'll be your first customer if you need help." I feel like I owe those people so much. A quick aside. I was charging a dollar a user a month, and those early investors came in and they're like, "Dan, what do we have to do to get to a million in recurring revenue." I said, "We need 83 thousand users."
Dan Hanrahan: Whatever the number was, and just to show how important it is to have people that have been there before. He was like, "Well, what if we changed a dollar user a month to $3 a user a month? Would anybody care?" I was like, "I don't know." So I went upstairs, and I can't code but I can change a one to a three in HTML, and I changed the one to a three on the website, and nobody cared. So, the value we were providing, all of a sudden now I needed to only go get what, I don't know? 20 some odd thousand users.
Anna: It's a big job, though, right?
Dan Hanrahan: So just those little things. Pricing and packaging matters. Not to say you could charge anything, but what is the range of acceptable?
Christian: What led to the dollar?
Dan Hanrahan: It was getting somebody to pay anything was just a ... You know, if I go back thinking about the early days, again, I don't think ideas are worth very much. Execution is worth a lot, and so can we, you know, spin up a slide deck? Okay, great. We have a slide deck. Can we spin up a sort of a demo? Yes. Can we spin up a working version of this thing that somebody uses for free? Yes. Can we get somebody to pay anything? Yes. So, it was just somewhat of an arbitrary number where the economics worked.
Dan Hanrahan: There were two forks in the road at that point. It was like we could build this massively sort of self-service long tail business servicing 10 employee companies, and we could focus a lot of product and energy there, or we could build something that served some of the larger companies. 50 plus, 100 plus, 10,000 plus employees. That's really hard too. That's another sort of fork in the road. I didn't know where we were going to go. I think either of those are viable opportunities, and getting the opportunity to make that decision required somebody to pay something.
Christian: Right. I think a lot of startups struggle with pricing. I think there's a fear that ... Well, you did a dollar per user. That if you do something like 10, you've locked in and you're just done.
Dan Hanrahan: Right.
Christian: But obviously you've increased the prices since then. You've got so many more models for pricing based on what they're getting. How do you handle conversations where you've got to raise the price on a customer?
Dan Hanrahan: Yeah. Some of those early customers were smaller businesses where what we built in 2015 worked. I mean, very quickly we started to add more to the platform. If you want to stay where you are, that that is totally fine. You can keep using what you're using. It's not going anywhere. We haven't sunsetted any product, knock on wood, so you can totally keep using it. Here's why we built this. Here's why it's adding more value. Here's why it's going to deliver more ROI for your business. We'd love to get you. This costs X, and since you were an early customer, we will discount that in a significant way for you, so you're going to pay more than what you were paying, but you're not going to pay as much as in that new customer would. That's kind of how we've handled it.
Christian: So, when you had this goal of your millionth user by 2020, was there any methodology behind?
Anna: What do you think was one of your biggest failures at Sigstr, and what do you feel like you learned from it?
Dan Hanrahan: I didn't understand how hard. I didn't have enough respect for engineering, and design, and product, and so I came back to the guys who had started that business. I said, "Guys, I'm fascinated by software. I want to get into the space." I said, "What do you want to do?" So we came up with some idea, and I found a contractor, right, that had sort of been in our network. I knew he was a good engineer. He did good work for some of my customers, and I said, "Greg, here's what we're going to do. It's going to be great. I'm going to check in with you in a week and we're going to look at the progress you've made." I had no understanding of the discipline of writing requirements and going through that true product process.
Dan Hanrahan: I came back in a week and I was like, "Why didn't you build it? I told you this, and that's not what I ... I can't believe we're not ready." We kept going through this for like three months, and I was putting that blame on him. It was my fault. I had no idea. What I came to the realization of, really quickly, it's like this is really hard, and if I'm going to get into the software world, I need a partner that I can trust that understands how to build software. So, that experience, it took us three months. We spent maybe 10 grand, and we had absolutely nothing on what ... Looking back now, it's a really simple idea to go out and execute on, and so just making sure that I wasn't surrounding myself with like-minded people, and that I valued the heck out of people that can do things that I can't do.
Anna: Why do you say like-minded people? Why is that something to avoid?
Dan Hanrahan: Maybe that like-minded. Similarly skilled. If you're in college, and you go to all of the business club meet ups because you're in business school, or if you're an engineer and you go to all the engineering meetups because you're in engineering school, then you're going to graduate and you're going to know a bunch of people just like you. But if I'm in the business school and I go hang out at the engineering club, now I've got a kind of a tandem there that's pretty cool. I think it's the same thing in the professional world. Just finding people that cover your blind spots that you can go out and build something worthwhile.
Anna: This is the last question I'm going to ask you. What does better product mean to you?
Dan Hanrahan: Better product means less rework. Better product means customers are actually using it, and getting value with his little rework as possible. I think that comes with all the way back to talking to customers first, making sure engineering is close to the customer, not just having somebody in between. Better product to me is building things of value that customers use with minimal rework.
Anna: Well said.
Christian: Well said.
Christian: That was Dan Hanrahan, and the best place to learn about Sigstr is Sigstr.com. That's ...
Christian: Dot C-O-M, just to be clear. I just want to spell every single thing out.
Anna: Don't mansplain to me. All right? [inaudible 00:17:28] URL.
Christian: My bad. SIGSTR.com is hiring, so if you're interested in that, check out their careers page on the site. If you want to connect with Dan, check him out on Twitter at Danhanrahan8. That's D-A-N-H-A-N-R-A-H-A-N-8.
Anna: Every time there's a consonant, just throw an A behind it.
Christian: Yep. Just put an A right in there. He has most of the As on the Internet all in his Twitter handle.
Anna: That's right.
Christian: So, easy way to remember it. This is the part of the show where we debrief about our conversation with Dan Rahan.
Anna: Dan Rahan.
Christian: I think it was refreshing to hear that you don't always necessarily have to have the big vision. He almost just had like a slice, like one little piece, like one little spark, or tinder, or whatever, and just opportunity, and then he's just sort of following the opportunity. The way I think Dan is a [inaudible 00:18:22]. I know our focus is on the product, but I think Dan as a person, being able to be the driver of the vision, and then set that aside and bring a CEO in, and still be the idea person where he's just constantly in the state of sparking up new ideas. I think for what you do with research, I think, is interesting because he seems to just constantly find that inspiration from constant ongoing customer research.
Anna: I think he does research in a really good way. A way that we don't hear a lot of people talk about. It's like that research for inspiration. It's not that he's analyzing and looking for, you know, he's not measuring things. He's really looking for opportunity, so he's taking what he hears from customers and he's putting it through his lens of, is this a great idea? Is this a market? Is this aligned to what we want to do?
Christian: He also was very clear. "I'm not talking to customers to get ... They're not telling me necessarily they want it," but he's hearing it.
Christian: This is something that you do a lot with clients. I think a lot of times people think about usability research, like existing product, researching how to optimize their product, and that sort of stuff, but what you often do is, when you're working with startups, is kind of get people to think about what you just said is research that's forward-looking. That it's not about an existing product. Can you talk more about how you do that with clients? How you actually kind of replicate what Dan does at Sigstr, where you're taking insights you're getting from customers, and turning them into forward-looking features?
Anna: The way that we like to think about it is we are using customers to inspire us, but they're not giving us the ideas. I think of it a little bit like a math equation, where it's more of what the customer gives us, plus kind of what we see in the market, divided by our business strategy kind of thing. We only want to filter out what fits and what's relevant to kind of our business goals, or what we want to do, but I think there's also something too of our product expertise. We've worked with lots of products. We've worked with lots of startups. We know what's kind of what's a good and valid idea and what's not. And that's what Dan brings. He brings expertise. He's built products, he's scaled products, and he brings that to these conversations, and I don't think you can understate that.
Christian: Right. We definitely talked a lot about integrations. I think we see that with a lot of companies too. I think what he was kind of hinting at, at some point you're using integrations as a growth strategy, so the relationship they've created with HubSpot is unique and valuable to them because it's helping them grow. Other integrations that he mentioned, I think, are more functional. Like we just need to have this because our customers need it, and it's a value add. We're not going to charge more in some cases, but these are things that they just have to have to even do their work. But, I thought it was interesting when he's talking about HubSpot, because when he detailed how they leveraged them as almost a symbiotic partner, where they're doing something for them and HubSpot is helping them. Again, to what you just brought up too, about the risk. It's not even just giving them their idea, but once they sort of pitched it, doing it for free was huge.
Anna: You mean Hubspot?
Christian: Yeah. We didn't ask him any of the numbers, but we can just assume that he is still standing here today, several years later, that it must have worked, but I think that's a really bold product decision on the integrations. I don't know that that will work for everybody to do something like that. I think he covered a lot of the details around what you should be asking yourself when you look at that integration, but I think, if there's one inspiration, I would hope that other people in product would take from that is that you don't just have to look at integrations as sort of a functional thing that your product has to do, but find other opportunities to work with them on how they can become marketing on your behalf. How they can drive your own sort of growth.
Anna: I just want to reiterate what he said. Three things to think about with a new product. Is it a common buyer? Can it fit under a common brand? Does it have the same tech stack?
Anna: Thanks so much for listening to the show this week. If you haven't yet, be sure to subscribe, rate, and review this podcast. Until then visit, innovatemap.com/podcast, and subscribe to learn how you can take your product to the next level. As always, we're curious. What does better product mean to you? Visit us up on Twitter at Innovatemap, or shoot us an email at firstname.lastname@example.org.
Christian: I'm Christian.
Anna: And I'm Anna, and you've been listening to Better Product.